Wednesday, August 03, 2011

What is a "culture of innovation" anyway?

I read a significant amount of material on innovation. Even though I'm deep in the trenches of innovation, and have written a fair bit about it myself, I think many of us (self included) are guilty of asserting positions without diving into them very deeply. When we talk about the importance of culture, especially when we advocate a "culture of innovation", we often write or say these words as if there is a general agreement as to what it means. While I suspect that everyone has some interpretation of that statement, I thought it would be interesting to write a post that describes what I think a "culture of innovation" is, after all, and ask you, gentle readers, to append your thoughts about my oversights or areas of over emphasis.

After all, the more we define our methods and clarify our approaches, the better we'll communicate and the simpler it will be to actually implement this stuff rather than simply talk about it. Herewith, my dissertation about "a culture of innovation".

To define this, we should start first with what is "corporate culture". To me, corporate culture is the set of assumptions, beliefs, practices, formal and informal rules and attitudes about how a company operates. Corporate culture evolves over time, and is both formal and informal. Corporate culture often shifts over time as well. Young entrepreneurial firms and startups have a culture that thrives on risk, speed and change. Growth is paramount. Older, established firms have a culture more typically based on rules, hierarchy, achievement of predictable milestones. While many firms have elaborately detailed organizational hierarchies and established workflows, corporate culture is often much more informal, and more powerful than any individual, and often more powerful than senior executives appreciate or expect.

In an organization with a strong corporate culture, people learn to fit in quickly, adjust their thinking to the predominant culture or are quickly ostracized. Corporate culture, more than any other factor, details how people think, what they believe is important and valuable, and dictates how work should get done. It is difficult to change, especially under duress, and often communicates much about the values and intentions of a business. For a blog post, that's as far as I'll go to define culture. There are plenty of other resources that, given time and space, will do a better job defining culture.

Now, to our main question: what is a culture of innovation, and is it very important? If corporate culture is as overarching and powerful as I've described above, if it can dictate how people think and what people do, then culture is clearly either a significant barrier to innovation or a significant enabler to innovation. And yes, it is binary. Most cultures, especially in larger companies, are focused on consistently achieving quarterly goals, eliminating risks, reducing variances. These corporate cultures make perfect sense - they are tuned to achieve what the markets tell the firm is important: consistent quarterly achievement against financial goals, with few hiccups or surprises. However, in most firms these cultures are at best resistant to innovation if not actively fearful of the implications: change, uncertainty, new tools and skills, variance, failure and risk.

A culture of innovation, therefore, indicates that an organization is at least willing to embrace many of the tools and techniques that innovation requires, but moreover is able to endure the potential outcomes. For every innovation success there are many attempts and several failures. Every innovation is potentially cannibalizing an existing product or service, and innovation forces constant change - not just to products and services, but to experiences and business models. This means that a culture of innovation is agile, nimble, constantly adapting and learning, open to experimentation and many points of view. A culture of innovation tolerates and learns from failure, incorporating the best parts of the failure into new efforts. A culture of innovation understands that innovation is a continuous, consistent process rather than an occasional effort. A culture of innovation seeks out internal and external viewpoints and perspectives that are different from what the team "wants" to hear, and works closely with customers, partners and even the disinterested to understand future needs. A culture of innovation has as much invested in understanding the future as it does in delivering value in the present. A culture of innovation constantly generates ideas but also has the ability to commercialize the best ideas and ships valuable products. A culture of innovation isn't just an idea machine, it is a commercialization machine.

So, how does a firm shift its culture to become more innovative? Just as it takes miles and a lot of space to turn a battleship, a corporate culture doesn't shift overnight. A culture of innovation is enhanced by leadership that reinforces it, but as 3M demonstrates a resilient culture of innovation can bear leaders who aren't supportive of innovation, and rebound when new leaders are announced. Strong cultures are more powerful than strong leaders. To build a culture of innovation, establish clear, consistent innovation goals, hire people with broad perspectives and interesting networks, encourage collaboration internally and externally, seek out new needs and new customers or market segments, train your teams on innovation tools and techniques, shift reward systems, compensation systems and most importantly evaluation systems. Make innovation as important as whatever the culture once thought was the most important thing - and do all of this over an extended period of time, because cultures have great inertia, a lot of patience and much resilience. A half-hearted approach won't work, and once a culture feels threatened it will simply burrow more deeply into the fabric of the organization.

We are simply too blithe about "a culture of innovation" as if this concept is simple, obvious and well-defined, as if we can take the red pill and suddenly our culture embraces innovation. Most cultures are actually resistant to innovation - at least its implications and many of its outcomes - so we need to move beyond the throw-away lines and recognize how important a culture of innovation is, and how difficult it is to achieve, and also how valuable it will be to have a culture of innovation when innovation becomes one of the few differentiable competencies left to us.

7 Comments:

I've been pondering this a lot as I've looked back at my time in Bell Labs where the definition of 'corporate culture' inherently, integrally meant innovation and the transition to AT&T corporate where it clearly didn't. Then factoring in my own startups, failures, my clients who have succeeded in creating a culture of innovation and who haven't, i'm not sure the distinction between a 'corporate culture' and a 'culture of innovation' really exists. While there are definitely tools, methods, rewards, recognition, etc to encourage innovation (successes & failures), if its not in the corporate culture DNA, then it's more vulnerable to the prevailing winds.

If a corporate culture values & fosters autonomy, discourse, divergence & convergence, empowerment, all those 'words' then is innovation a natural by-product? and then innovation also reinforces those values? The companies I've seen who are really innovative value people - in word and deed - at a very fundamental level in their corporate culture.

Just wondering between the 'root' and the 'symptom' (albeit a good one) - what really are the root values or traits in a corporate culture that make innovation real?

Jeff: I like what you have to say. You make many good points and make them clearly. When I get existential, I ask myself what ISN'T a culture of innovation? It's all the stuff you mention and more, for sure. I like what Peter Drucker had to say about the subject: "Company cultures are like country cultures. Don't try to change them -- work with what you've got." So much of the "problem" boils down to command and control and trust -- or the lack thereof. Most companies I work with who are asking for culture change approach it as if it was a Six Sigma project. All too often, they are looking for a "process" -- one that discounts or undervalues the most important thing and that is the "people side". I think the Hopi Indians had a clue about this. Their going mindset was to consider that each action would affect seven generations out. Big picture, not next quarter. Culture change is often approached like a lot of people approach dieting. They want to drop 10 pounds fast and eat nothing but watermelon or fast or buy a bunch of refrigerator magnets reminding them of their goal. Then, because the "change" is not very deep, they gain all the weight back (and more), making all their family members cranky in the process. I think every company has the potential for major culture change and it boils down to each INDIVIDUAL owning the effort and doing the inner work required to make the change something real rather than fodder for the quarterly newsletter. Thanks for teeing up this topic on your blog!

Jeff,Very well done, and so on the mark. Large organizations seem to believe that they can change the culture and become 'innovative' by implementing a new innovation program. Several PowerPoint presentations, and a few consuming, but failed projects later, they move on to some other 'game changing program'.

I recall a C-level leader of a large Pharma company explaining to me how their new innovation program was going to propel the business with new drugs and future business success. He continued to explain how this program was a one year trial. That was it ... a year. Cool technology, interesting tools, but nothing of real substance. There was some talk about how to engage the people in the organization, but no discussion about the culture, the long-term commitments that would be required to change deep-rooted beliefs, etc..

Hi Jeffrey, good post. You're right, "let's have a culture of innovation" is similar to "let's have world peace" in terms of rhetoric and reality. Culture is the accumulation of the actions and decisions of an organization, so this really does need to start at the top. I'm a big fan of setting targets for innovation, and including more than just one group e.g. the technical folks. Innovation is about implementation, and that's a company wide responsibility.

Companies who want an innovation culture should forget about it, focus on leadership and action on innovation, and one day some time in the future they'll come into work and realize that they do, after all, have an innovation culture.

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